Iraq, Algeria support extension of oil production cuts

PostedMay 18, 2017

The announcement will likely boost to oil prices, which yesterday jumped on reports from the American Petroleum Institute and the Energy Information Administration, which both estimated US crude oil inventories to have fallen by more than 5 million barrels in the week to May 5.

Brent crude was up 57 cents, hovering at $50.79 per barrel, while US West Texas Intermediate jumped 61 cents to $47.94.

Supply from the 11 OPEC members with production targets under the accord - all except Libya and Nigeria - fell to 29.674 million bpd last month, according to figures from secondary sources that OPEC uses to monitor output.

The US Energy Information Administration (EIA) in its May 2017 short-term energy outlook increased the forecast for oil output in Kazakhstan in 2017 and 2018.

OPEC and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group's members said.

"As a result, USA crude oil production surpassed 9 mb/d in February 2017, about 0.5 mb/d higher than the low seen in September 2016". The initial agreement envisaged OPEC taking off 1.2 million bpd from global supply with Russian Federation and 10 other non-members cutting another 600,000 bpd.

WTI crude oil prices dropped to the level of $43.76 per barrel, the level not seen since mid-November 2016, on resurgence of bearish factors that seems to have hindered the Opec's efforts to support world oil markets.

International Brent crude futures were at $50.46 a barrel at 4.38am GMT on Thursday, up 24c, or 0.5%, from their last close.

An extension of the deal would push supply down even further in the second half of the year, the IEA's Neil Atkinson said at the Platts Crude Oil Summit in London on Wednesday.

Reuters reported on Tuesday that state-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June. "U.S. tight crude output is expected to rise rapidly and increase by 600,000 bpd in 2017", OPEC said, using anther term for shale.

The Organisation of Petroleum Exporting Countries (OPEC) has called on United States shale oil drillers to cut output for the prosperity of global economy.

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